A blog on things sports and economics related in New Zealand and abroad.

Wednesday, 26 October 2011

Further thoughts on interview with Larry Williams

I had an interview this evening at around 6:15pm with Larry Williams on Newstalk ZB to discuss this press release that came out earlier today regarding this country's future hosting of the Rugby World Cup.

Larry raised a couple of points that I've had a chance to think more about since the interview, and I thought I'd jot them down before I forget them.

Firstly, I should clarify my belief that co-hosting a future RWC with Australia would be more commercially viable as the costs of running the tournament would be shared between the two countries and this country would be more likely to make ends meet in terms of covering operational costs. As it is, the present tournament is incurring a $39m loss and counting with additional operational costs borne by local, regional and central government.

Why would Australia want to co-host with us? They've already flown solo before (in 2003), and did pretty well, too. Indeed, we have shown that the tournament can be considered a success being hosted entirely within one country. To me, what it comes down to is the value that New Zealanders place on having the tournament. If we perceive that the benefits exceed the cost - and we need to be careful about what benefits actually constitute (see Eric Crampton's recent post in Offsetting Behavior for additional considerations that must be made as part of an objective analysis, including the crowding out effect, the net feel-good effect - otherwise known as the 'warm fuzzies' - and the diversion of public amenities) then the cost of going it alone might well be worth it.

Another consideration to the co-hosting argument should be the 'impact' on smaller cities. I think many would agree with the notion that it has actually been the smaller cities who have provided this tournament with much of its value - not necessarily from the visiting spectators attracted to these cities, but the enthusiastic embracing of the games and teams that they hosted. Smaller cities like Napier, Nelson, Palmerston North and New Plymouth got right behind their games, and this was great to see. A co-hosting arrangement is likely to result in more games going to major cities and less to smaller centres, and so some of the value of the tournament to the country is likely to be lost. I sense that this would disappoint many.

So, should we host the tournament again? We need to be objective when it comes to a future tournament, and consider the implications of hosting. Given that much of the infrastructure is in place, I'm sure we'd like to think that in maybe 16 or 20 years time it could well be New Zealand's time again. My concern is that the price tag attached to the tournament may well have escalated well beyond our means by that stage. We have shown how a country can embrace the event. It would be nice to think that the IRB might embrace some form of revenue/profit sharing to see the place many consider the spiritual home of rugby host the tournament again. This, of course, remains to be seen.